News Brief No. 01/92

News Brief: IMF Completes Fifth and Sixth Reviews for Ukraine under Extended Arrangement

September 20, 2001

The Executive Board of the International Monetary Fund (IMF) today completed the fifth and sixth reviews under the Extended Fund Facility (EFF) for Ukraine. As a result, Ukraine will be able to draw up to the equivalent of SDR 290.78 million (about US$376.56 million). Including today's disbursement, Ukraine has drawn SDR 1.19 billion (about US$1.59 billion) from the SDR 1.91 billion (about US$2.6 billion) arrangement.¹

In commenting on the Executive Board's discussion of the review, Anne Krueger, First Deputy Managing Director, made the following statement:

"Economic performance in 2001 has been impressive, with strong growth and declining inflation. Monetary and fiscal policy in the first half of 2001 have been on track and the external position has improved markedly.

"The Executive Board welcomes the authorities' commitment to maintain sound macroeconomic policies. Continued prudent monetary policies in combination with exchange rate flexibility will be essential to maintain low inflation. In order to consolidate recent financial stabilization gains, the budget deficit target for 2002 should not be higher than 1.7 percent of GDP. The recently enacted modern Budget Code and the ongoing improvements in tax administration will be important to supporting the fiscal targets.

"The Fund looks forward to an acceleration and deepening of structural reforms in Ukraine, as this will be key to maintain favorable growth prospects in the medium term. The authorities should proceed decisively with the restructuring of large banks and ensure their adherence to all prudential norms. In order to improve the environment for private business, it will be important to strengthen transparency and governance in key sectors of the economy, notably the energy sector, as well as in the privatization process. Liberalization of the agriculture sector should also be accelerated," Ms. Krueger said.

¹ The EFF arrangement was originally approved by the IMF Executive Board on September 4, 1998.